Release Date: August 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Yunji Inc (YJ, Financial) opened its first offline store focusing on traditional Chinese medicine, marking a new chapter in the health sector.
- The company plans to expand its presence into offline communities and establish wellness spaces, enhancing the connection between online and offline services.
- Yunji Inc (YJ) is committed to offering quality products at reasonable prices, ensuring value for users and fair profit margins for service managers.
- The company is innovating in marketing by combining technology and AI development with short video content creation, aiming to nurture talent and enhance service capabilities.
- Despite a decrease in total revenues, Yunji Inc (YJ) maintained a strong gross margin of 46.6%, attributed to customer loyalty towards private labels and an effective product creation strategy.
Negative Points
- Total revenues decreased to RMB106 million from RMB167.1 million a year ago, primarily due to softer consumer confidence and ongoing adjustments to the product range.
- Revenues from sales of merchandise and marketplace business both saw declines, impacting overall financial performance.
- Operating expenses, although reduced, still resulted in a loss from operations of RMB23.1 million compared to RMB11.8 million a year ago.
- Net loss was RMB11.9 million, although improved from the previous year's RMB41.5 million, it still indicates financial challenges.
- Liquidity assets decreased significantly to RMB324.5 million from RMB561.9 million as of December 31, 2023, raising concerns about long-term financial stability.
Q & A Highlights
Q: Hi. Good evening. Thanks for taking my questions. I have a question about our business operation. Mr. Xiao just mentioned that you have participated in numerous product traceability efforts. Could you share more color from this experience? And how will these insights be applied to our product selection and operation at Yunji?
A: Thank you for your question. I think currently, of course, the contract almost every week for products traceability. In fact, there are many good merchants and the supply chains in China, especially for high demand and high repurchase rate products like meat, eggs and dairy. However, we cannot simply rely on inspection reports, historical sales data and various promotional materials to confidently introduce those merchants to our platform. Only more authentic cost effective and healthy products which are better suited to the physique of the Chinese people can bring real value to our users. These require our team to explore any nutrients personally, they generate sharing material funding traceability activities can gain more consumer trust. Additionally, along with off-line traceability, we can host more off-line salon and taking events, leveraging the advantages of a face-to-face communication to acquire loyal customers. Within such off-line salon and off-line traceability activities, we're going to create the products that are going to go to the deep heart of the consumers. And those products and the related materials are going to encourage the consumers to buy on our platform. Thank you for your question.
Q: Could you provide more details on the financial performance for the second quarter of 2024?
A: During the second quarter of 2024, we encountered some market dynamics that influenced our operations. However, our current financial positions allow us to support our strategic initiatives as we regulate the profitability of both new and existing business lines, making thoughtful adjustments in response to market changes. This approach helps us maintain a stable financial position in a shifting business landscape. Total revenues were RMB106 million compared to RMB167.1 million a year ago. Revenues from sales of merchandise were RMB83 million and the revenues from our marketplace business were RMB21.1 million. Despite these changes, our gross margin remained relatively strong at 46.6%. Net loss was RMB11.9 million compared to RMB41.5 million a year ago, while adjusted net loss were RMB9.7 million compared with RMB39.8 million a year ago.
Q: What are the key initiatives Yunji is focusing on to drive future growth?
A: We are focusing on several key initiatives to drive future growth. Firstly, we are expanding our presence into offline communities and establishing wellness spaces, bringing our healthcare product therapy to consumers. In July, we opened our first offline store, focusing on traditional Chinese medicine and awareness. This marks a new chapter for us in the health sector. Secondly, we plan to increase our range of organic grain and health products, maintaining our commitment to quality and value. Additionally, we are innovating in our marketing efforts by combining technology and AI development with short video content creation. Our goal is to nurture talent by teaching users how to create original content and providing AI support and marketing skills.
Q: How is Yunji addressing the challenges in the current market landscape?
A: While the challenges remain, we are committed to our long-term strategic goals. We are focused on improving our operations and adapting to the evolving market landscape. We continue to refine our inventory management protocols, which contribute to a gross margin of 46.6%. We are also optimizing our product range and supplier network to better align with customer preferences. Our ongoing improvements in inventory management and cost optimization will position us favorably for future growth as we continue to innovate and refine our product offerings.
Q: Can you elaborate on the performance and future plans for Yunji's private label brand, SUYE?
A: In the beauty sector of our private label brand, SUYE, Yunji celebrated its 14th anniversary. Over the years, SUYE has grown alongside our loyal users. Our product development continues to focus on anti-aging solutions, where we try to create exceptional products. We have developed a comprehensive product line, including UV resistance sunscreens, collagen supplements, and eye care products. We are forming a complete anti-aging matrix to meet users' diverse needs. We are also innovating in our marketing efforts by combining technology and AI development with short video content creation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
